European stocks recover while attention stays on the Middle East; UK retail sales fall

We’re witnessing some growth in this week’s final trading session.

The Pan-European Stoxx 600 index was up by 0.6% at the close, with most sectors—other than oil and gas—showing positive movement, likely impacted by the intensifying conflict between Israel and Iran.

The Stoxx Europe Oil and Gas Index saw a slight dip of 0.1%, while Brent Crude Oil futures were trading at $77.07 per barrel, down 1.78, or 2.3%.

All major German indexes finished in the green, with the DAX leading with a 1.2% increase.

Overall, the Stoxx 600 index is on track for a weekly loss of about 1.1%.

U.S. asset management firm Apollo aims to extend £4.5 billion ($6 billion) in loans to address funding gaps for the UK nuclear project at Hinkley Point.

This deal was first reported by Financial Times, and subsequently confirmed by two sources who spoke to CNBC confidentially.

This loan is being recognized as one of the largest private capital commitments towards a project of national importance in the UK.

Eutelsat shares surged 11% at 9:07 AM in London following an announcement that €1.35 billion ($1.55 billion) in capital was secured, backed by French provinces and other investors.

The company stated that this capital injection, along with a debt refinancing strategy, is intended to support investments in existing low-earth orbit (LEO) operations.

Eutelsat claims to be the only European operator with a fully operational LEO network, contributing significantly to military communications, cyber defense, and government relations. This aligns with the EU and NATO’s strategic goals.

Other investors, including the UK, are also joining in the capital raise.

French President Emmanuel Macron noted on X that reinforcing Eutelsat’s position will improve strategic autonomy for France and Europe. He plans to elaborate on this during Friday’s Paris Air Show.

This year has seen significant volatility in Eutelsat’s stock, especially after early momentum suggested it could rival Elon Musk’s Starlink.

European stock markets are attempting to recover from earlier losses as they opened on Friday. The Stoxx 600 index was up 0.5%, the DAX increased by 0.75%, and the UK’s FTSE 100 rose by 0.33%.

In a noticeable reversal, most sectors were in positive territory, particularly travel, which rose by 1.2%, while oil and gas stocks fell 0.6%.

Along with the retail sales statistics, the UK’s National Statistics Bureau reported this morning that official borrowing was at £17.7 billion ($23.8 billion) in May, which is £700 million more than last year.

The finance deficit, which refers to borrowing for public sector expenses, saw a decrease of £1.7 billion from May 2024, falling to £12.8 billion.

Public sector net debt, excluding banks, is estimated to be 96.4% of GDP, marking a 0.5 percentage point increase from the previous year.

Economists have cautioned that Finance Minister Rachel Reeves might face challenges in meeting fiscal targets, given weak growth and rising borrowing costs. This might lead to increased taxes later this year.

“If this trend persists, total borrowing for the 2025-26 fiscal year could approach £150 billion, potentially surpassing the expected £137 billion,” noted Joe Nellis, an economic adviser.

“With limited options for significant tax hikes or deep spending cuts in the near term, the Prime Minister may have to adjust her debt reduction targets as a percentage of GDP, particularly in the medium term.”

Retail sales in the UK dipped by 2.7% in May, marking the sharpest drop since December 2023, as reported by the National Bureau of Statistics. Economists surveyed by Reuters anticipated a 0.5% decline.

The previous month saw a remarkable rebound, attributed in part to favorable weather in April that helped sales grow by 1.3%.